How does contribution margin differ from gross margin? VIRUS How will net income under variable costing...

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How does contribution margin differ from gross margin? VIRUS How will net income under variable costing compare to net income

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Answer 1

Answer #1

Solution-4

Contribution margin is differ from Gross Margin because Cost of Goods Sold is calculated differently in both the method.

In absorption costing, cost of Goods Sold is calculated by considering variable cost of production with Applied fixed Overhead Cost however in variable costing, Cost of Goods Sold is calculated , only by considering all the Variable expense.

Solution-5

A) Unit Produced Equal unit sold

No Any difference in income calculated as Absorption costing viz-a-viz Variable costing due to no inventory in hand.

B) Unit Produced Excess unit sold

Income calculated as per Absorption costing will be higher than income calculated as per Variable costing because Fixed Overhed cost deferred in balance inventor under Absorption costing method.

c) Unit Produced less than unit sold

Income calculated as per Absorption costing will be lower than income calculated as per Variable costing because higher fixed overhead will be allocated on Unit sold.

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Answer 2

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How does contribution margin differ from gross margin? VIRUS How will net income under variable costing...

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